There are more things in heaven and earth

November 04, 2012

No shirt, no shoes

According to this article, 97% of all clothing bought in the United States is made in other countries.

What de-industrialization has meant is that we no longer manufacture lightbulbs, phones, computers, TVs, clothing, shoes, and so forth. We are even net importers of food by some measures. Our supply of imports depends on the continued availability of cheap crude oil, and what industry we do have would be similarly crippled if oil became expensive.

We are able to purchase all these things from other countries because they still want dollars. It used to be that the dollar was the safest currency to keep a country's savings in, and more importantly it was the only way to buy crude oil, since all oil was bought and sold using dollars.

Not so anymore. Things are changing. Major economic countries such as China, Brazil, Japana, and Russia are making deals with each other to conduct trade in their own currencies, not dollars. Iran is selling oil in other currencies (though we tend to invade countries which make this move, e.g. Iraq).

What we will do for shoes, shirts, lightbulbs or phones should other countries stop wanting dollars?

Worse by far is that we cannot even support our own electric grid using our own manufacturing. According to this DOE report:

While the exact statistics of EHV [Extra High Voltage] power transformers produced by domestic facilities are unavailable, this suggests that the United States procured almost all of its EHV power transformers overseas.

Right, so if our electric grid gets fried for some reason we will be waiting on China and South Korea to send us replacement parts.

I don't think life can be organized at the global level, contrary to what the elites think. The systems simply become too complex, and globalization running on a "just in time" basis is a disaster waiting to happen. Yes, there are efficiencies of scale, but only to a point! And self-sufficiency has to be balanced against that.